bit weak compared to last year. 13 contracts greater than $100 million. 16 contracts greater than 100 million signed last year. all thbing said, karen, you are long ibm. >> i am. >> are you concerned, though, about the shorter-term trade on this one, that maybe there are better places to put your money to work? >> this is sort of a lower risk, lower reward kind of trade. it's disappointing to have it trade down, but as pete touched on the valuation is really attractive. i'd like to hear more about it. they do have a big analyst day coming up i believe it's may 12th, so i think they'll go into much greater detail. but at this valuation i really like it. >> what do you make of the action here? >> i think this is like a lot of the names we've seen. this wasn't a name that -- i agree with karen. i like what they did in global services, i like their asian growth up 10%, free cash flow up 400 million. this is a story that continues to get better and continues to grow around the world. this is a name that had to sell. it does not surprise me.

take us back to where we were with a number of these other names and i think you've seen the same result. google. again, the numbers were fine. people want to pick on the cost side of their business. but that's really what they're looking for. anything. >> but did they really have to sell it in the curious thing to me is when i was looking at the performance of ibm year to darkts i know it's near the 52-week highs but it's not really ultimately impressive. you look at somebody like dell outperforming them. you look at hewlett-packard outperforming them right now. so when i look at ibm, i find it a little curious, and i think there might be opportunities on the pullback. >> and you would think it would trade more along the lines of a j&j or coca-cola in terms of it being a larger safer kind of company -- >> because of the services side. >> they're a little more diversified here. let's check in with cnbc's silicon valley bureau chief jim goldman. jim, you've been on the conference call, about 33 minutes in right now. what is the latest you're hearing? >> you know, the interesting thing, you guys are hitting on some of the key points, but you wonder if the company's gross margins may have been a little squeamish because you're thinking maybe if gross margins were better the company would

have been able to increase its full-year eps a little more, and that's what's going to come up in the q & a part of this conference call. did gross margins sink to a level where 11.20 could have been 11.25 or 11.30? are the problems the company is seeing operationally to meet that gross margins miss going to continue on into the second, third, and fourth quarter? that's sort of what i'll be watching on for that. you mentioned the backlog, the $134 billion. right now you know the company is saying that erosion in backlog is now lower than it's been at any time in two years. so that bodes very well. bric countries you were talking about up 14%. that bodes very well for this company going forward. you know, i was saying before this conference call began you look at these numbers, it's not too hot, it's not too cold. it's kind of just right. and that's what you expect from ibm in its first quarter. >> but isn't that kind of the problem right now? you can't just serve up a just about right kind of a quarter right now when you're looking at the markets we're looking at, you've got to get the hot

wonderful thing that everybody wants to eat up, right? i mean, was it the services, the fact that the services weren't quite as big of a build as maybe people were expecting? >> i think that's a really good point, but i think, you know, in the scope of what ibm is reporting right now it would have been a far bigger problem had the company missed than it is that the company comes in with just an ever so slight beat. what's really going to be telling is this next quarter. the quarter that we're in now because you're talking about the office 2010 upgrade cycle. we're going to see a lot of i.t. managers, the enterprise start cracking open that checkbook and start to spend again. if we don't see a marked improvement in this company in the second and third quarters, that becomes a broader issue, and i think you're going to start to see improvement there, not just at ibm but at cisco, hp, intel, microsoft, all of those big cap techs. >> all right, jim, we'll let you get back on that conference call. we'll check in with jim goldman later on when there are some more developments. off that call. let's teak a look at the after-hours session at ibm and take a look also at some of its competitors out there. hewlett-packard, maybe an accenture out there. what they're saying about

consulting and services, that really will probably kind of forecast or help us forecast what to expect from some of the other people. b.k., you've been tracking this call as well. what do you make of it so far? >> i think you guys touched on most of it here, but ibm's one of those tough names that nobody really has an edge on earnings. and it's one of the reasons why i sold it this morning. i was long it coming into earnings. i didn't feel like i really had an edge that anybody else out there has. and i think that's probably what's going on here. maybe at the 129 level, 127 level i might look at getting back in. but i do think there's better bangs for your buck out there. >> b.k., thanks for nap we'll see you a little bit later on. want to move on here because we've got to talk about goldman sachs here. just when we thought it was safe to retire this animation -- >> who dare -- goldman sachs? >> what is he exactly saying? >> who dare challenge goldman sachs? >> i think he's saying "luke, i am your father."

i don't know. >> we did see shares of goldman sachs make a dramatic midday turnaround carrying the rest of the financials with it. let's talk a little about what was behind this turnaround. bloomberg reporting the s.e.c. voting whether or not to bring charges was 3-2 along party lines. karen, does this sort of weaken the case for financial reform? because we were saying on friday that the timing of it was curious. the sector traded as if financial reform was going to come and it was going to come hard on the back of this goldman news. we saw a turnaround across the board. what does that mean to you? >> i just don't think that the public outcry will be lessened because it was 3-2. i don't think the public really focuses on the panel and that it was along party lines or not. i think that there is enough political momentum right now to get something done with more teeth in it than would have been the case before. i also think it's really impossible to know at this point what the fallout will be for goldman sachs in the industry at large. i mean, we don't know, is this going to be halliburton? do you remember halliburton's scandal? and in the end three years later

it ends up being nothing and nobody remembers it. we may be looking at that. we may be looking at something else. i just don't know how you can know right now. >> my buddy tommy kern, georgetown '86, he did a great job, he's a lawyer. he also sent me a "wall street journal" editorial. ski talked about it on friday. if this is the best the s.e.c. came up with after as long as investigated it's pretty flimsy. and i'm not as outraged as most people. and remember paulson wasn't paulson before the last few months. he was just sort of another hedge fund manager out there. granted one of the larger ones. but his star has definitely been on the rise over the last six months or so. a lot of it after this whole thing happened. again, i don't share the outrage. goldman sachs just is being goldman sachs. >> for the people that want to try the political side to this whole deal and what's coming down the pike in washington, people are also talking about mary schapiro, head of the s.e.c., this is the second time she's been -- the independent's cast the deciding vote on the settlement on the back of the

america, merrill lynch settlement too. people are worried this is part of an attack on the entire sector and there's other names to follow, still feel nervous. and if you look at what the s.e.c.'s doing here, it's hard to separate that from what the administration -- although they are absolutely independent. but the timing is uncanny. >> i can tell you this. the read from the options market speshlth, when you look at goldman sachs, you look at the volatility, they traded four times normal volume. almost 500,000 contracts today. volatility came in throughout the day. by the end of the day. we had peaked out last friday somewhere near that mid 40s sort of an area, 43%, 45% volatility. now it's around 37%, 38%, the at the money calls and puts. those straddles are already starting to come in. there's a level of comfort -- i'm not saying they're right. but the markets themselves are interpreting this right now as a level of comfort. and then when you look at the xlf, over a million contracts, most of them on the put side, may 15s, may 16s, and suddenly you'd start wringing your hands saying oh, my gosh, everybody's scared right now about the financials. this was tied to buying the xlf and selling the up side call.

so this is actually more of a bullish play than it was a bearish play. when you look at this huge volume, 800,000 plus on the put side. the puts were being tied in with stock. that's like buying the calls. >> i know dennis is coming on, so i don't want to steal his thunder. i don't think this is over. last week we didn't see an outside day on friday. we saw an outside week. meaning that the high of the week was friday's high. higher than the previous high of the week. low lower than the low. so technically, it was a monster reversal on friday. on tremendous volume, which was not particularly bullish. >> you mentioned dennis gartman. we do want to bring in dennis gartman of "the gartman letter" for his thoughts on goldman. and dennis, you probably heard pete talking about how investors in the market have a level of comfort when it comes to the goldman story. still, tomorrow we get the earnings. we have the conference call. we get a press release after the close today saying that they're bringing in their general counsel to answer questions. >> sure. >> to me this seems like this does not go away. tomorrow it looks like another round of this. >> first of all, do you really think they're going to have anything but gangbusters earnings? it will be phenomenal earnings that come out. don't come out and announce

ahead of time that we're going to give you a preannouncement. i think this is something that doesn't go away for a long period of time. my old line is there's never just one cockroach. there's always a problem that keeps coming out. the press understands how to ask new questions. prosecutors understand how to ask better questions. they go and find different things in the documentation. germany's already said that they're going to be taking a look at it. goldman is a great company. goldman is going to be around for a long period of time. they have been damaged, however, and this is not going away tomorrow. >> there are already some estimates out there. we had brad hintz from sanford bernstein on on friday and he said the worst case scenario is like 1.20 or so, and that's if goldman loses everything, if they're fined a massive fine-f they have to actually cover the $1 billion in losses, everything. and that is still manageable. so is it possible that we still have these cockroaches and they come but it's already factored into the stock? we've seen that time and time again here in the markets. >> the problem is that this is all psychology. yeah, brad is one of the smartest guys. when he's on here, i listen. when i see his name on the

sheet, i go and turn the tv on because he's going to give you very, very precise information. but $1.20 is not important when it is the psychology that has changed. the public's going to take umbrage in the fact that goldman sachs is being thrown upon a fire. the public wants to see this happen right now. bankers have a very bad name. whether we like it or not, earnings are relatively inconsequential. this isn't going to go away. is it going to be detrimental to the economy as a whole? likely not at all. i think the implications for the overall economy are relatively minimal. i think the implications for the financial instruments arena are material and long, drawn out, and very disconcerting. >> if you were advising goldman sachs on this call tomorrow, how would you tell them to address this situation? >> i'd tell lloyd come out, be absolutely as straightforward as you can, bring out any sorts of information that might be culpable, show everything that you possibly can, be

straightforward and put it out on the street. we always know from watergate on forward, it's the cover-up that gets you. so just inculcate people with more information than you can possibly handle and just be straightforward. >> denny, it's guy. >> hey, guy. >> i know you've been bearish. jim rogers i think over the weekend said this might be the final straw that broke the camel's back, maybe this is the exogenous event that leads to the market correcting. what do you think? >> you know, it's still a bull market, isn't it, guy? the darn thing just keeps going up regardless of what they throw at it. the economy still remains strong. it's always possible that this was the exogenous straw on the camel that breaks it. my guess is i wouldn't be surprised if the rest of the market moves to new highs and the financial instruments, goldman included, have a bit of difficulty. but anybody who's tried -- and i'll be blunt. i've tried every once in a while to get bearish on stocks and it blows right up in my face. the only thing you can do is turn right around and say it is a bull market. as was said in qult reminiscences of a stock

operator," it's a bull market, isn't it? and it is. >> dennis, thanks so much. we appreciate your time. we appreciate your take on the situation. you know, it's interesting. dennis had mentioned that he would tell lloyd to come on the call, lloyd, not to say "who dare challenge goldman sachs?" but -- >> that would be really funny. just lighten it up a little. >> if you want to use that animation, call us. you can use it. but according to the press release they issued today, it doesn't seem like he will be on that conference call or if he is he's not going to be making material statements. it's going to be the cfo, david vinnier, who's going to be talking about the financials, and then it's going to be their general counsel talking about the situation that they're under. and you know, from the standpoint of a shareholder, karen, would you be upset that goldman sachs got a wells notice over the summer and did not disclose it? >> you know, i don't know because they could have received many wells notices. a lot of them turn out to be absolutely nothing, particularly for a company like goldman sachs's size. and you never know how the market's going to react.

i think it would probably be a surprise if someone said this is going to come out and you're going to lose $13 billion of market cap. so as a -- i don't know that that would make me particularly upset. i think it will be interesting to see dennis talking about be as transparent as you can. i don't know many gcs who love the advice be as transparent as you possibly can. that's my guess. i don't know. we don't know how this thing will continue to spin. >> sure. we want to bring your attention to some headlines we're running at the bottom of your screen. apparently, there is another exogenous event outside of goldman sachs here happening. another volcanic eruption and a new ash cloud could be coming. this according to uk air authorities. let's go to brian kelly, who is an expert in all things volcanic ash related. >> b.k. >> brian, apparently you've got a derivative trade off of this. zblim i'm an expert in ashes. >> speaking of spewing, go ahead, brian. >> ryan air is your play on this. european airline, operates out of the uk like a southwest air of europe. they're going to be affected the

most. fudge trade in europe, also look at british airways. >> you know, b.k., and we talked about this friday, jet fuel now, there's a glut of jet fuel. very expensive to store. we said it was bearish crude oil. look what happened today in the crude market and look at the way the contangos are blowing out in crude. you wonder now if this is the straw that broke the crude oil back. we'll see. >> absolutely. that's the real question, what kind of economic drag is this going to be on the euro zone. >> and i think it's going to be a major drag at least in the short run on oil. and i think you know if you listen to the other headwinds in oil, opec is having issues getting their solidarity together. you've got a number of people that have crowded this trade and look at the dollar starting to rally again too. the commodities trade over the last couple days has been the most painful part of it actually. it hantds been financials. it's been commodities. and much of this is all about the crowded trades. if you look at what happened today, you look at some of the coal names, steel names. these are the names where investors have suffered the most despite the fact here are upgrades, here are great earnings, here's sales guidance, arch release released today. these are the names you have to be most concerned about because while dennis says the bear

market is not here anytime soon i totally agree with dennis. every data point we've been getting from around the world over the last couple days and weeks says that the g-3 is healthier than we thought it was. but right now the markets are telling you something, and it's not just the volcanic ash. it's not just goldman. it's china and their property issues. it's greece who's still in the same spot and their spreads are widening out. you have to be careful. the risk trades are in trouble. >> but the guidance from arch was phenomenal. i look at some of these coal names, and i think this opportunity now is if you're watching china right now and you see some of the pullback that we've seen, if that's not able to control itself and actually starts to bounce once again, those names i think bounce along with it as well. you look at somebody like an arch, it bounced off the lows today. you look at a lot of these coal names, they really started to react rather nicely. and then you go to the chemical sector. we talk about the rails all the time. look at dupont. just about everybody across the street now is suddenly excited about dupont, not just because of the fact of specific chemicals but across the board they see margin expansion and all the rest. targets are now 44, 45 -- people

right now are positioning themselves for those chemicals, the under the radar chemicals, the eastmans and all the rest of them, to really start to participate even more to the up side. so i don't believe this commodity trade is completely over. it's a great pause, and it might be an opportunity. >> within the coal story, though, you have to be careful about which ones are more levered to met coal versus thermal coal, arch coal being one that's more levered to the thermal coal story was little less -- >> although. although today one of the parts of release was they talked about doubling their production of met coal, now they're talking about tripling their pruvgs met coal. still very insignificant but in the big picture if you keep an eye on that that just gives you an idea of where arch really can expand and that's where they can exploit the rest of the business. >> here's one reason why the thermal coal story may be a little more uncertain. it's because nat gas prices are pretty low. they're what 4 and change -- >> 3.96 closed today. >> we actually talked to the ceo of arch coal today on the back of the earnings release, we asked him at what price nat gas has to fall to start getting concerned that power plants are going to be switching from coal to nat gas.

>> we do see natural gas taking some coal conversion when it gets around $4, where it's at today. and then if it gets down to around $3, i think as an industry again in central appalachia you see some significant impacts to central appalachian steam coal. >> sounds like if you were a bear on nat gas you've got to be a bear on a thermal coal-related play. >> or you can defend a lot of the m&a activity that's been taking plau in the space where the guys have been diversifying into nat gas. a lost people said hey, why are you doing that? and the relate reality is this is a great hedge for these guys at a time when coal prices may suffer from gas being more interesting. >> let's hit the poll of the day today because we love asking you what you think. who gains from goldman's pain? a, morgan stanley. b, the underdog, jefferies. c, the comeback kid, citi, which of course had a nice pop today. mr. vikram, thumbs up to you. log on to fastmoney.cnbc.com right now, tell us what you think. >> who dare challenge goldman sachs? >> oh, come on.

>> more "fast money" coming up next. >> how do you trade the house that steve built? ahead of apple earnings tomorrow, we slice up the stock so you can play it from every perspective. it's "fast money" 360. plus, guy gets behind the wheel to give you an electric trade. when america's post-market show continues.

take a look at shares of ibm. they're off their after-hours session low bouncing back slightly. we're about almost an hour into the conference call. gross margins as jim goldman called it a little bit squeamish. let's go to brian kelly back at the prop desk. brian, you've got an interesting trade off ibm. >> absolutely. looking at these ibm earnings yes, they're disappointing but there are two things in here that struck me. it was consulting services up 18% and software services up 11%. as well added on to that you had these big contract signings that were down a little bit. my trade off of this is rack space, rax. what they do is essentially consulting and software, computer services for the mid to small company. you can get cloud computing, managed hosting. i think this is really the growth area here as things

switch from the pc to the cloud. >> b.k., just dying to say rackspace although they did get an upgrade last week and it's a name you've liked for a while. i'll give you a thumbs up there. >> he likes rax. b.k., we'll see you later. while the equity market jumps at every goldman-related headline a more interesting reaction is happening in the derivatives pits. breaking if down for us is larry mcdonald, he's the author of "a colossal failure of common sense: the inside story of lehman's collapse" and a managing director at pangaea capital. want to ask you the question on everybody's mind and that is who is next? what are you hearing specifically? i know you're the lehman expert here. are they actually calling leemon fishlz in? ? yeah, in recent days -- first of all, it's great to be on my favorite program in finance. >> which one? oh, sorry. >> i've been waiting for this moment for a long time. in recent days lehman brothers executives have been called back for the second and third time by

the s.e.c. i've talked to two people over the weekend that were questioned, and there's no question the s.e.c. is coming back at lehman brothers. >> what are they asking lehman brothers, and will this -- obviously, some of these executives may not have jobs at this point. i'm wondering what the inclination is of lehman to actually divulge information which might make life a lot harder for some of the other banks that still exist. >> well, they're focused on mortgage-backed securities. repo 105, hiding assets. something i talk about in my book, qualified special purpose entities. you could actually hide mortgages not just in cdos but you can hide them in the cayman islands in other types of entities. >> larry,ish it sounds like some of the stuff lehman was doing is far more egregious than what happened here at goldman sachs. true or false? >> true. 100% true. the only thing that's interesting with goldman is the credit default protection since last wednesday has almost

doubled in price. so if you're going to try to buy default protection in goldman sachs, it traded today at a higher level than even citigroup for the first time since probably 2008. >> larry, who is next -- look around the world. whether it's if germany, is it deutsche bank? is it barclays? they each have their homegrown possible villains, the guys that came out so far on top. who do you think is next, knowing what you know about how these thing unwind? >> well, there's no question that deutsche bank and ubs were at the top of the league tables in the cdo space. so if we're going to look at cdos and subprime toxic assets, those are two likely candidates for more inquiry. >> okay, larry, we're going to leave it there for now. thanks so much for being on our show. larry mcdonald, the managing director at pangaea capital. >> thanks for being so -- that's great. that's fantastic. come back. bring him back, larry. >> absolutely. >> we got to call him larry. that's fantastic. >> that's his name.

>> well, lawrence, larry. >> moving on here. >> link. >> viewers, contain your excitement. apple's earnings less than 24 hours away. so without further ado we unveil the next best thing to a 4g iphone, the "fast money" 360 on apple. >> we'll be buyers of apple going into the earnings. they have a $300 target. we think macs did very well on the quarter. we think iphones were solid with great catalysts ahead for the iphone. we thought ipod touch was solid. also good refresh with 4.0. great catalysts. lots of up side. we'll be buyers here. >> we're going it look at apple's chart here. apple was a breakout over the 200 level which its range was 280. the range difference added on to the breakout suggested apple can work above 300. the trend is very strong. the stock might be a little overbought here but we'd be looking to buy it on any pullback or any consolidation. >> hey, guys, the option market's taking a look at apple

and they're looking for a 7% to 8% move in apple over the next 30 days which would incorporate the earnings move coming up in the next few days here. what i'd be taking a look at is i'm bullish on the stock but option traders are selling the 280 call out to july right now. that's probably your up side potential in the stock. i'd be looking to buy a 240-260 call spread, not outlaying a ton of cash by buying option premiums. >> on three counts pretty bullish. fundamentals, options, as well as the technicals. that makes me scared. karen, are you scared? >> no, i'm not so scared. remember, though, when you do see a headline number in apple there's always the sandbag that comes after. so you know, whatever that immediate number is, just wait. they'll talk it down. >> and everybody's -- everybody seems to be focusing on the ipad and e-commerce, this, that, and the other, the subscriptions. that's all fantastic. but the first gentleman there mentioned the macs. that's where they're going to make their money. that's what you want to look at. you want to look at that number over everything else because that's truly what apple's all about.

feed into the mac. that's the story. and i think if they can feed that the way we think they are with the pc cycle this could be a huge -- >> more so than the iphone story in your view? >> the iphone's a great story. there's absolutely no doubt about it. and it's become the real story as well. but it's still about the mac. look at the percentage that they own still of the market. and that's where their growth can come. and they haven't discounted. they still charge you the premium cost for their computer. >> i was going to say, and when you're looking at am again, some of these derivative fillets, the components that are inside of it, the two companies that i love that are in korea that have also had a tough couple days is samsung and lg. lg makes these 9.7-inch screens that they apparently don't have enough of. and thea p. chip they're working with samsung on these even though they're coming out with their own chip, the reality is most of their stuff is still driven off of this combination. these are two names both in korea, lpl and samsung that trades in london that i think you have to own if you love apple. >> going to move on here because we want to talk about another tech story here, not just apple. that's capturing traders' attention tomorrow. yahoo is also out after the bell. it has been a trickier trade than just buy and hold.

to increase your odds of success we turn to mike khouw for some "options action" today. what's your thesis on yahoo, which has been an outperformer versus its rival google this year? >> certainly the stock has done really well lately. obviously we've seen a fairly sharp move up from around 16 bucks to around $18 now. an important point about yahoo around earnings is that this thing has only had a magnitude on average of its moves over the last eight quarters of about 3.3%. the options markets, on the other hand, are actually implying a much bigger move, probably about 6.4%. now, when you hear these kinds of numbers, an obvious question you might ask yourself is how do i play that, how do i sell that move if i'm inclined to, and actually the way you would do that is by either selling a straddle or a strangle, which is an unlimited risk trade or by putting on a long calendar trade. and the way you would do that in this case is to sell the may 18 puss puts which were trading about 80 cents when i was looking at these things earlier today. i think the stock rallied a little bit so, they might be

about 60 now and purchased the june puts. net net you're going to pay about 20 cents. this is a time value trade. the may puts are going to decay more rapidly and what you're betting on is that the stock is not going to move that sharply off the earnings, which is historically what it's done. >> do you like calendar spreads? >> i love calendar spreads. the only issue i might have right here, mike-s is there enough of a discrepancy in the volatilities? are you going to be able to make much off this 20-cent spread? what is your expectation that it can expand to? >> well, that's a great point. when we put in those implied moves, basically what we're doing is we're taking a measurement between how expensive the front month options are ver rer how expensive the second month options are. and obviously if that discrepancy in this case implying 6.4%, or an increase, the front month is trading about six or seven clicks over the second one, that's one of those situations where if you don't think it's going to move you might look to sell that front month option and buy the longer dated one. >> all right, mike. thanks. >> what are you giggling about? >> you. ever since i asked pete a

legitimate question, i said pete, do you like calendar sprea spreads? he said he loves calendar spreads. and then i get a giggle from the peanut gallery. >> it's leek it's third grade here. >> yeah. >> thank you, mike khouw. you can catch mike and me on "options action" every friday night on cnbc 5:30 p.m. live. more "fast money" coming up next. hey can i play with the toys ?

sure, but let me get a little information first. for broccoli, say one.

for toys, say two. toys ! the system can't process your response at this time. what ? please call back between 8 and 5 central standard time. he's in control. goodbye. even kids know it's wrong to give someone the run around. at ally bank you never have to deal with an endless automated system. you can talk to a real person 24/7. it's just the right thing to do.

welcome back to "fast money." we've got some breaking news on citi. calpers is withholding votes for two citi board members. andrew liverus. andrew i believe is his first name. of dow. and andrew rhoden of bank of america because of their accountability in the financial crisis. we're just getting headlines here. so let's just make this clear, that these are just headlines that we're getting. they also oppose -- they oppose the advisory vote on executive compensation. this comes ahead of the citi shareholder meeting tomorrow and

on the heels of citi's better-than-expected quarter. karen, you're typing away. >> i thought it was judah but i might be wrong. >> if melissa's wrong i gave her that information because we were looking for the roden and we pulled up bank of america. so -- >> so we apologize -- >> the bank of america person is on the citi board? >> mea culpa. >> and if you're looking at activity again, citi has been off the charts, traded 3 million contracts last week, traded nearly 3 million today. 2 million of which were calls once again. people have been attacking and goes for the 5s, the 7s -- >> the may 5s. >> expecting the stock to start moving through 5 soon. >> one thing that was noticeable was vikram pandit saying we absolutely couldn't have survived without taxpayer support and just taking the complete opposite tack from others that feel they didn't need support or just trying to get behind the -- >> that was nice. but the one thing that stood out for me about citibank's numbers is what we said was going to happen is their trading

revenue's down 30% because they've sold off a lot of high income assets. and you're saying where is citi's business going forward? fromfrom a trading perspective this was a big problem for these guys. showed up in the numbers. everyone else bank of america was up 12%, jpmorgan up 4%. this is where these guys should be making their money and these guys are not. >> okay. it is judah rhoden. we apologize to andrew rhoden. but they are withholding their votes for andrew liverus and judith rhoden ahead of the shareholders meeting tomorrow. changing gears here, g.i. joe and the transformers grab the headlines. is the success of toys like these -- this is my little pony convertible. these are helping hasbro shares jump nearly 3%. with the consumer showing signs -- >> is it safe? >> the pony -- the ponies are strapped in. anyway. anyway. can shareholders expect more

days like today? on the fast line hasbro ceo and "fast money" friend brian goldner. brian, we're having some fun with the ponies here on set. good to have you. >> hey, nice to see you guys. >> you said on the conference call that you feel more confident than you did 90 days ago in terms of reaffirming your 2010. what exactly happened in the past 90 days that made you more confident? are you seeing more orders? what data points are you looking at? >> well, we're seeing the consumer trends out there certainly benefiting our brand. the innovation that we've put into our product lines, immersive play experiences, driving across digital gaming, and getting paid for those experiences by consumers, both at retail as well as online and mobile, video game space, all of that contributing to our belief that our brands are doing well at retail and will continue to do well. and that's how we reiterate our guidance to revenue growth and eps growth for this year. >> brian, congrats on a tremendous quarter. your stock traded 52-week high

today, i think $41 was the price. are you concerned that you're becoming too dependent on movies? "transformers" has been huge for gu you guys. are you putting too many eggs in one basket? >> not at all. we're also focused on the movie business. we're reimagining brands like nerf that's grown over fivefold in the last couple years. nerf's not dependent on that. in fact, instead our users and nerf have made 45,000 youtube videos on their own. littlest pet shop is about an online experience. our top eight brands of the company are not based on just movies. top eight brands of the company used to be 17% of our business back in 2001. today they represent nearly 50% of our business. and we put over a billion dollars in top line in the company in revenues and eps have grown over the last nine years. >> brian, we've got some toys here on set. we've got the littlest pet shop here. we've got the my little pony convertible. and there are some concerns about the safety of the ponies in this convertible.

but i'm curious. >> sensitive issue right now. >> we want to make sure the ponies are safe, right? i mean, really. >> they have helmets. right? >> right. exactly. what are some of the hottest toys here? a lot of girl toys, it seems. >> well, certainly littlest pet shop continues to perform very well. for real friends, which you don't have there. the snugables, for real friends brand is a great brand globally for us. the nerf brand on the boys' side has really performed exceedingly well, and we're seeing it around the world. it used to be a brand that was only in the u.s. and now is being adopted by countries all around the world. you know, but also not on the set but certainly important, if you look at new platforms, you guys were talking about the ipad. well, scrabble is one of the top ten apps now on the ipad. the iphone and itouch as well as pogo. our games resonate with consumers and they're paying us for those experiences across all those platforms. >> what are the margins like when somebody downloads say a

scrabble or monopoly? >> the games business historically is very strong operating returns, and anything we do in the digital space is accretive to that. >> just quickly when it comes to scrabble there's some outrage there about the rules being changed. what's your take as a chief at hasbro on whether or not you can use proper nouns? >> that was actually done outside the u.s. i think it was the uk product. we only have rights to scrabble in north america. so i can't comment on that. >> okay. brian goldner, ceo at hasbro. thanks so much for joining us. we appreciate it. let's dot trade. we of course had mattel earnings last week which also came in better than expected. it looks like the consumer when it comes to the toy space is back. is there a trade here? >> yeah. i mean, the stock has been teflon now for -- well, for the last year, year and a half frankly. i mean, the valuations are still pretty fair. they become a global company, which is what you wanted to see. so i think has still works here. >> and 20% of their revenues are global. that's actually remained somewhat stagnant. if anything i think they may start to get hurt from the margins. but as guy says the valuation is right in line, 2 1/2% div.

i don't see what stops the nerf ball from throwing another tight spiral. >> nice. well done. >> let's take a check on shares of ibm as we head out here. again, better-than-expected quarter, gross margins a little bit of a concern as well as large contracts still down on the back of posting its earnings after the bell today. more "fast money" coming up next. boss: y'know, geico opened its doors back in 1936

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our four previous hearings have looked at failure. today's hearing has a different focus. the five hedge fund managers who will testify today have had unimaginable success in the financial markets. >> now that it's been revealed exactly how john paulson achieved that unimaginable success, the whole industry may fall under some new scrutiny. steven gandel is the senior writer for "time" magazine whose later article spells out why the hedgies might be hedge in the s.e.c.'s sights. steven, great to have you with us. >> thanks for having me on because this is where we're going next. i don't know if it's lawsuits, but it's definitely more regulation for the people right there in your studio and also the people that watch your show. >> what kind of regulation, though, in terms of registration that didn't exactly work out. john paulson has been registering with the s.e.c.

since something like 2004, and yet this still slipped their sights. >> yes. that's right. so there's voluntary registration. the new financial regulation -- financial regulations that are proposed talk about having mandatory registration. but what we need is we need a regular reporting of trades. we need hedge funds to go to the s.e.c. and say -- not that they have to be disclosed publicly, but there needs to be some sort of central clearinghouse at the s.e.c. that says this is what these hedge funds are doing. and if the s.e.c. had seen this, they might have seen all these trades coming and the bubble that was forming. the s.e.c. needs another early warning sign and hedge funds should be it. >> they don't have enough people, though. are you talking about every trade a hedge fund does? there's just no way the volume, can they can keep up with this. you talk about the registration. hedge funds were mandatory to register two years ago, and that got thrown out. and the real issue is not that hedge funds are stepping outside the lines. the real issue here was the regulation for the people that were producing these securities. so again, i don't see where hedge funds have been the culpable party here. in fact, they're not even the

ones that are being indicted. >> says the hedge fund manager. >> we're talking about s.e.c. indictments here, and that has to do -- s.e.c. has to do with civil securities fraud, it has to do with disclosure. you're right. hedge funds don't have a disclosure problem. but they might be next in terms of criminal investigations because if paulson and other hedge funds went to the investment banks and said don't tell your investors they want to deceive your investors, that's a criminal problem. it may not be a disclosure problem. but i'm not saying about necessarily criminal problems. i'm saying about regulatory problems, that we have all these products that hedge funds trade that are not -- they're not watched themselves. we need another way to track them. so if you want to have private label products, fine, but hedge funds that are trading them can be another way they have to report, that's another way the s.e.c. can get a handle on things so bubbles don't form like we had last time. >> i don't think bubbles were forming because of the hedge funds in any way. so to be -- i mean, i think there's nothing wrong with transparency and why not have a

central clearing agency for all these trades? that's fine. but i don't see how hedge funds were culpable in the collapse. >> they were feeding these new products. they were -- because they wanted credit default swaps on these mortgage bonds, the investment banks needed ways to lay off these trades, and they were laying off these trades by creating cdos and cdo squares -- >> but there had to be a buyer on the other side of this trade. and to the -- you know, so -- >> but there had to be -- well, they were buying the cds protection. so there had to be a celler protectio protection, right? so yes. but the reason the investment banks were going after it, creating these new products, is because hedge funds were pouring in and the s.e.c. would have seen that problem. >> stephen, we're going to leave it there. thanks so much. obviously the two hedge funds managers on this desk take a little bit different view on this situation. >> he's right that the derivatives market has gotten out of control, but this is independent of hedge funds. i think his point is that hedge funds have spurred the demand that have made banks fall all over themselves to do this.

but the reality is this is a different issue. >> right. okay. i think we're going to take a quick break here. more "fast money" up next.

all right. thursday a very important day. the 40th anniversary of earth day. so it's earth week here at nbc. take a look. ♪ we rode in trucks >> let's face, it folks. i know it's not the most responsible thing. but i can't see in my lifetime going from this to this. ♪ here in my car i feel safest of all ♪ but in the next five years i may not have to. president obama has set the bar high for automakers. with tough fuel standards calling for 34 miles per gallon by 2016. so they're putting a rush on their electric car plans. ones that will make americans feel like ed begley jr. behind the wheel. cars like the sleek-looking chevy volt and nissan leap are due out next year. and ford's set to release five electric cars by 2013. but teaming up with microsoft to make it happen. >> microsoft home and ford motor company are taking the first step to help facilitate

effective energy management between consumers, plug-in electric vehicles, and utilities. >> but you know what? i may just be getting used to this anyway. i'll see you, folks. ♪ to everybody that be living it up we say ♪ >> i have two questions for you. >> one? >> one, do they have to use the jaws of life to pry you out of that little tiny car? >> they had to butter my rear end to get me in that car. let me tell you. >> tmi. >> second question, what's the trade? >> no, actually, it's not true. i'm not a small -- i'm not -- >> what's not true? >> i'm not pete's size. but you know, i'm 6'3", 220. and there was a lot of room in that car. it looks like the size of my little pet shop car. first of all, thanks to the guys -- it was a mercedes dealership on the west side. mercedes designs these smart cars. so thank you folks for having me down there. gets up to 90 miles an hour speedwise, gets up to 41 miles per gallon. the trade out of these things, because a lot of people are buying them, believe it or not,

people are real automobiles are actually buying these cars and commuting. they're safer than you think. the trade comes down to ford, who's going to roll out a whole new line themselves. smart cars in 37 country. then you go to microsoft, although i don't think that's the trade, but then you look at a borg warner which we've been talking about ad infinitum forever. not that they're into smart cars but as the world gets greener bwa wins. thank you, mercedes-benz. and smart car. >> thank you. all right. final trade right after this. >> land o'lakes. d# 1-800-345-2550 if it was up to me?

tdd# 1-800-345-2550 investment firms wouldn't even dream of overcharging people. tdd# 1-800-345-2550 in fact, they'd spend all of their time dreaming up ways tdd# 1-800-345-2550 to give us more for our money. tdd# 1-800-345-2550 i guess i'd just like to see a little more give tdd# 1-800-345-2550 and a little less take, you know? tdd# 1-800-345-2550 if it was up to me, they'd spend a lot more time tdd# 1-800-345-2550 worrying about my bottom line. tdd# 1-800-345-2550 (announcer) at charles schwab, investors rule. tdd# 1-800-345-2550 are you ready to rule?

tim? >> long pot. >> eastman chemical. >> karen. >> corning. >> pete. >> dupont. >> i'm melissa lee. see you back here tomorrow.

i'm jim cramer, and welcome to my world. >> you need to get in the game! >> firms are going to go out of business, and he's nuts! they're nuts! they know nothing! >> i always like to say there's a bull market somewhere. >> "mad money." you can't afford to miss it. oh. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i just want to try to make you some money. my job is not just to entertain, but it's also to educate. so why don't you call me at 1-800-743-cnbc? what's the deal with the golden slacks anyway? i mean, how could a pair of pants cause such havoc like it did last week? do people just decide that the s.e.c. was simply doing what i'm doing? hemming in the golden slacks.

just a little hemming? and then it's party time? don't you think that's what happened today? with the big slacks shrugoff, with the dow rallying 73 points, s&p 500 up about half a percent after being down badly at one point? maybe the market realized that even the s.e.c., the commission charging goldman, wasn't sure of the case with two commissioners out of five, the two republicans voting against bringing it. no wonder golden slacks, after getting hammered down a couple, ended up rallying more than $2 as some regarded the whole thing as overdone. and the markdown on the goldman sachs, a buying opportunity. regardless, what really matters is as we said on friday, until we see disappointing earnings, which we really haven't, our instincts were to buy, like we told you on friday. you've got to buy that weakness. and we got it. we're buyers. we're not sellers. particularly any company with great earnings like